Local hard money lender screwed me big

[Patrick Mattingly]

I recently used a local hard money lender here in Louisville KY for my first flip. Everything went very smooth until lender sent a payoff demand that exceeded my promissory note by $28k. Where I should have netted $35k on my first flip I walked with $8k. 

Lender tacked on over $30k in additional fees I never signed for. When I disputed the amount they threatened to foreclose on me if I didnt sign the closing statement when I resold the home. 

What can I do??

[Erik Estrada]

Quote from @Patrick Mattingly:

I recently used a local hard money lender here in Louisville KY for my first flip. Everything went very smooth until lender sent a payoff demand that exceeded my promissory note by $28k. Where I should have netted $35k on my first flip I walked with $8k. 

Lender tacked on over $30k in additional fees I never signed for. When I disputed the amount they threatened to foreclose on me if I didnt sign the closing statement when I resold the home. 

What can I do??

 Make sure to read the entire note you signed when you purchased the property. Many HMLs will use a lawyer to create loan documents for them. Read the repayment schedules, prepayment terms, late fees, etc.. 

If there is nothing on there showing that would trigger the excessive fees on the payoff statement, I would pursue legal action. 

This is actually very common to see in some private funds. They bet on the borrower losing the collateral, and make profit from excessive loan fees etc..